Most people who think they understands the battle between Apple vs Epic but it is battle between from behind Chinese company Tencent( who owns significant % of Epic) and American company Apple. Chinese Government and their supported from behind Chinese companies have one goal/strategy to dominate the world crushing every non-Chinese companies.
If you don't believe me; look at the progress the Chinese companies made in last few years. Moreover, continue watching them their tactical investments in companies outside China to eventually take over or take their IP and destroy them. Never ever trust China. Support the political party who openly discuss such problems and put appropriate measure to stop such assaults on rest of the world. Also, fight against your own people who are uninformed, not smart to see these issues, so you can stop bad information disease spread by your own people.
“The only thing necessary for the triumph of evil is for good men to do nothing.
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
Since it's your first post, I'll disable my 'troll alert' to try and respond.
Have you ever developed any piece of software? I'm an Engineer by education, and Professor by profession. I am an ok C and FORTRAN programmer (yeah, I know, a lot of people will say: Yuck!), due to specific needs from my area. But in my work for High Performance Computing (HPC) I've always used Intel MKL, which is a library Intel spent money making, and distribute for Intel platforms, for free, if you are in Academia, or an Open Source Developer, of for a license fee, if you are a for profit developer.
In my license is stated that, if I made an app, and distributed it for profit, using Intel MKL, I'd liable to missing license fees, and other damages. That's because I'm abusing my free license. Intel invested making it (and also profited from CPU sales), and if I am to make money based on their work, they want some of it. That's fair, isn't it? I'd still be writing code ,if I had to remake what MKL offers from scratch! And probably would not achieve the same performance.
Apple has a similar stance. It does provides all the tools needed for developing, in any of its platforms. And they are not cheap to make. Nor does an annual $99 fee cover costs. Apple also distributes the app, which is not a small expanse. Go to AWS and get a price quotation of server bandwidth? If your app has GBs of size, and is downloaded by millions of people, like Fortnite was, you'd have to pay tens of thousands of dollars, just for the distribution.
Apple makes nothing from Fortnite, because it is free. Although there are high costs distributing it. But Epic makes its bread from IAP. Should Apple host a multi-million raking app for free? Just because it is a trillion company? The work Epic stands on, on Apple developed APIs, has no aggregated value? And distribution costs?
Qualcomm is another matter altogether. Their contribution was solely on device communications, and nowhere else. No App, or any other function of the device, or even its design, was being propped up by Qualcomm IP. Same IP is being used in various white box Androids. It was it's own firmware, running on its own baseband chip, which was made by a third party, with licenses paid for. Qualcomm wanted to be paid twice, by the same aggregated value, in what became infamously known as double dipping.
If Qualcomm case had any legs to stand, it would not have settled promptly, as it did. Epic, won't be much different, I'd expect.
I'm not at all suggesting Apple distrubute applications for free, it just needs to be proportonate. I appriciate it's not cheap to provide the tools and infrastructure to deliver applications, but Apple have decided to keep that ecosystem closed (for possibly the right reasons on security). Bear in mind though, Apple typically host the binaries but in a lot of cases other content is side loaded (e.g. game assets, Netflix video) and support for multiplayer Fortnite is handled by Epic - they pay for the infrastructure.
Qualcomm, you could argue that they do prop up the value of the iphone. Without a modem, the smartphone wouldn't be very smart. I am not supportive of the QCM model either, but i do see their stance as similar. QCM were seeking a value as a percentage of the overal device not their sole contribution. Apple are doing a similar thing.
Btw, Epic charge a 5% royalty after the first $1M of gross revenue. I assume they have similar investment in the tooling costs.
I'm not at all suggesting Apple distrubute applications for free, it just needs to be proportonate. I appriciate it's not cheap to provide the tools and infrastructure to deliver applications, but Apple have decided to keep that ecosystem closed (for possibly the right reasons on security). Bear in mind though, Apple typically host the binaries but in a lot of cases other content is side loaded (e.g. game assets, Netflix video) and support for multiplayer Fortnite is handled by Epic - they pay for the infrastructure.
Qualcomm, you could argue that they do prop up the value of the iphone. Without a modem, the smartphone wouldn't be very smart. I am not supportive of the QCM model either, but i do see their stance as similar. QCM were seeking a value as a percentage of the overal device not their sole contribution. Apple are doing a similar thing.
Btw, Epic charge a 5% royalty after the first $1M of gross revenue. I assume they have similar investment in the tooling costs.
In the beginning, people used cell phones to make calls. Qualcomm deserved that 100% basis for licensing.
Since then, smartphones have become the Swiss army knives of consumer products, which has lead to the death of a mounting number of consumer product classes as those capabilities have been folded into smartphones.
Why is it still okay for Qualcomm to use the entire cost of the phone as the basis for licensing fees? The cellular modem has nothing to do with the screen or build quality, or the quality or configuration of cameras, as examples. Why should the makers of flagship smartphones be penalized with the same fee structures as basic phone that structure was built on?
On the other hand, providing a standard fee structure for the app store makes sense as it creates a level playing field for all participants, including those that actually use the store for free by charging nothing for their apps.
I think that it is a fair question of whether that standard fee structure should be 30%, but I don't think that alternate app stores are actually consumer friendly at all, given that users would compromise both security and device support from the developer of the OS, as in this case, Apple could no longer be liable or responsible for a device that is compromised by an alternate apps store.
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is one is a license to sell a product which is standardly used in most cellular devices, the other is an agreement to sell a product through another company.
The product from Epic does not fall under FRAND because of the way the App Store agreements are created and executed. If a developer feels that the agreement is unfair, the correct course of action is to gather evidence and take the offending party to court and prove that they were treated unfairly under the contract they agreed to.
Epic hasn’t proved they have been harmed by the agreement they made with Apple. In fact, Apple can show that the time Fortnite has been on the App Store it has cost Apple an amount of money to maintain, which was agreed to by Epic when they originally submitted their app to Apple for approval.
I'm not at all suggesting Apple distrubute applications for free, it just needs to be proportonate. I appriciate it's not cheap to provide the tools and infrastructure to deliver applications, but Apple have decided to keep that ecosystem closed (for possibly the right reasons on security). Bear in mind though, Apple typically host the binaries but in a lot of cases other content is side loaded (e.g. game assets, Netflix video) and support for multiplayer Fortnite is handled by Epic - they pay for the infrastructure.
Qualcomm, you could argue that they do prop up the value of the iphone. Without a modem, the smartphone wouldn't be very smart. I am not supportive of the QCM model either, but i do see their stance as similar. QCM were seeking a value as a percentage of the overal device not their sole contribution. Apple are doing a similar thing.
Btw, Epic charge a 5% royalty after the first $1M of gross revenue. I assume they have similar investment in the tooling costs.
I beg to disagree. Without a Qualcomm modem, you could get an Intel one. Even without Qualcomm IP, most smartphones would still be smart, just lacking some LTE optimizations. Some of Qualcomm IP was deemed standard essential, with Qualcomm's blessing, and that made it subject to FRAND, which Qualcomm was clearly abusing—if not outright breaking.
But really, that's a false equivalency altogether. Just as the comparison of costs associated with distribution of downloadable content (bought by a lesser fraction of users) versus the download of a multi-gigabyte app (which most people may have sampled, even if for a few minutes/hours)!
Now, try and compare the value Apple offers, for a 30% cut, to the value Epic offers, for a 5% cut. On one side, there is a multitude of applications, platforms, and market within your reach, limited only by your capacity to execute an idea, or solution, for macOS, iPadOS, iOS, tvOS and watchOS. On the other side, you can spend a few hours designing a "badass" item for a game, that soon enough, will be replaced by the next "cool" thing, probably from another vendor...
I'm not sure there's much weight to the 30% argument for Apple's own apps, but I think there is regarding the rules Apple applies to developers versus itself. The difference between products on Amazon and the App Store, is iOS developers have no choice but to use the App Store for iOS apps. You are correct in that Apple selling their own apps is the same as Amazon selling Amazon Essentials items on their site. However, iOS developers *have* to sell their apps on the App Store. They can't sell their app in the Google Play store because it's not compatible. People making coffee machines or whatever don't *have* to sell their coffee machine on Amazon's store, they can sell them in Walmart, direct, eBay, whatever. If they don't like the markup Amazon charges, they're free to go elsewhere. iOS developers can't go elsewhere. Saying they can go to the Google Play store is an entirely false equivalence because they can't just sell the same product at the Google Play store without rewriting the whole thing. Yes they can use cross-platform APIs to assist this, but cross-platform iOS apps are pretty crap.
A better equivalence would be BMW forcing every customer to buy all spares and accessories through them, and anyone making any kind of spare part or accessory for any BMW has to sell through BMW, and BMW charging the manufacturer 30% for the privilege. Want a phone holder? Got to go through BMW. Need a new thermostat? Got to go through BMW. As it is now, people can replace parts on their car with compatible third party parts (equivalent to sideloading apps on iOS/Android) and that's their risk. People are aware of this risk and are usually willing to take it even if it's their life on the line (unlike the risk with iPhone sideloading, where the worst that can happen is you get malware) - because the risk is so low it's worth it.
First of all, iOS developers have to read and agree to an EULA/ToS before they even start coding as they install XCode and create their dev accounts. And it’s not like they don’t *know* that iOS-specific code written with XCode is compatible with iOS alone from the get-go, either.
As for the whole parts situation, that’s not a really good analogy. Car parts (mostly) don’t deal with your personal data and safety (apart, obviously, from GPS navigation and entertainment systems, and other critical components relating to vehicle safety); computer and smartphone apps, on the other hand… may very well contain intentional vulnerabilities, backdoors, full-blown malware etc. if they come from untrusted sources.
And now that you mention parts, so does hardware (and I’m not just referring to vulnerabilities of the accidental kind, like those found in Intel chips, but more nefarious stuff in counterfeit, non-OEM parts). I am a staunch right-to-repair advocate, but I can completely understand the difference between replacing some random, dumb component like a capacitor, or a sensitive and mission-critical component such as a T2 chip. And Apple could and should allow some trusted stores to at least do the former and reserve full logic board swaps for the latter, and they will always be complete hypocrites in my view regarding environmental impact for not doing so.
Anyway, I digress; on the other hand, I don’t think they aren’t being sincere about the security factor of not having third-party stores on their platform. Can you seriously argue that the Mac is as safe from malware as the iPhone and iPad? What about Android devices?
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is this. With QCM, their patents were granted SEP (Standard Essential Patents) status by the cellular industry. This means that every smart phone must use QCM patients in order to be compatible with industry standards. And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory). Plus QCM can not deny any smartphone maker the use of their patents. Any dispute over licensing terms will be settle by a court and under FRAND, if an agreement can not be reached.
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
Having Fortnight in the Apple App Store is not essential for Apple to sell any of their iOS iDevices. Nor is it essential for Epic to have Fortnight in the Apple App Store. Epic can survive without iOS players. After all, 71% of Fortnight players are on game consoles and mobile gaming is only 12% of Fortnight players... right?. iOS and the Apple App Store can not be considered a monopoly in this case, as Epic has easily made a sizable profit with the other 88% of gamers on other platforms. Even after paying a 30% cut on 71% of them.
No one forced Epic to signed the agreement to pay Apple 30% of Fortnight in-app revenue. But Epic did just that. And instead of just pulling Fortnight from the Apple App Store because they weren't happy with paying Apple a 30% cut (but I bet they had no problem with their 70% cut) and then disputing Apple 30% cut, they violated the terms they agreed to that allowed Fortnight in the Apple App Store. Thus forcing Apple remove Fortnight. And now Epic is suing Apple for removing Fortnight from their App Store because they violated the terms of the agreement they signed? That's like if a renter that signed a 1 year lease agreement and then started paying 30$ less in rent after several months because he thought it was too high on the leased he signed and then sues the landlord because he was evicted.
Epic seem to have no problem paying a 30% cut to MS, Sony and Nintendo. It seems to be the standard rate for such an arrangement. It doesn't matter that Epic doesn't think they were getting their 30% worth with Apple cut. They were still getting 70%. The same 70% they got with Fortnight on X-Box, PlayStation and Switch. If Apple wanted to donate all of the 30% they got from Epic Fortnight game to an organization that helps kids free their addiction to online gaming, Apple is free to do that with their cut. Epic has no say in that. That has no bearing on Epic still making the same 70% from the less than 12% of iOS players, as from the 71% of players on X-Box, Playstation and Switch.
Suppose Apple said that it was pure greed for Epic to charge Fortnight players $20 for a digital "cool" outfit when it cost Epic practically no more than a player playing with the not so cool $8 outfit or the standard free outfit. It's not like it cost Epic more to ship the "cool" outfit to the player or the "cool" outfit consumes more bandwidth. Apple could easy look at that and say ... we want a 35% cut, if you want Fortnight in our App Store. Their store, their terms.
Apple never signed a license agreement with QCM, under the terms that QCM wanted to license out their SEP patents and then reneged on that agreement some time later. And Apple has never signed any license agreement with other patent holders, under the terms QCM wanted for their license. So QCM can't argue that Apple signed the same type of agreement for other patent licenses but not willing to sign the same type of agreement with us.
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is this. With QCM, their patents were granted SEP (Standard Essential Patents) status by the cellular industry. This means that every smart phone must use QCM patients in order to be compatible with industry standards. And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory). Plus QCM can not deny any smartphone maker the use of their patents. Any dispute over licensing terms will be settle by a court and under FRAND, if an agreement can not be reached.
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
As a related aside, you did see that much of the Koh ruling finding Qualcomm abused their position has now been overturned on appeal, correct? Not at all pertinent or comparable to the App Store, but something you should be aware of before posting on the subject in other threads.
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is this. With QCM, their patents were granted SEP (Standard Essential Patents) status by the cellular industry. This means that every smart phone must use QCM patients in order to be compatible with industry standards. And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory). Plus QCM can not deny any smartphone maker the use of their patents. Any dispute over licensing terms will be settle by a court and under FRAND, if an agreement can not be reached.
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
As a related aside, you did see that much of the Koh ruling finding Qualcomm abused their position has now been overturned on appeal, correct? Not at all pertinent or comparable to the App Store, but something you should be aware of before posting on the subject in other threads.
But that ruling had nothing to do with Apple and QCM dispute. That was the suit brought on by the FTC. Apple and QCM settled their license agreement before that ruling and the overturning of it. Neither the first ruling or the overturning of it it changed any of the terms that Apple and QCM already agreed to. Maybe you should be aware of that before posting on the subject.
Boy you are are touchy and this isn't even about Google. Just where did i say QCM had abuse their SEP status under FRAND. All I said was that Apple had the right to dispute the terms of QCM license policy if they didn't think QCM was negotiating under FRAND and have a court decide the matter. Either way, QCM can not abuse their monopoly with their SEP patents. But QCM and Apple settled and Apple dropped their suit. I bet QCM gave up a little of what they originally wanted for a license and Apple didn't get as much as they wanted. Which is how it's suppose to work. I do not know the terms of Apple and QCM agreement. Do you?
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is this. With QCM, their patents were granted SEP (Standard Essential Patents) status by the cellular industry. This means that every smart phone must use QCM patients in order to be compatible with industry standards. And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory). Plus QCM can not deny any smartphone maker the use of their patents. Any dispute over licensing terms will be settle by a court and under FRAND, if an agreement can not be reached.
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
As a related aside, you did see that much of the Koh ruling finding Qualcomm abused their position has now been overturned on appeal, correct? Not at all pertinent or comparable to the App Store, but something you should be aware of before posting on the subject in other threads.
But that ruling had nothing to do with Apple and QCM dispute. That was the suit brought on by the FTC. Apple and QCM settled their license agreement before that ruling and the overturning of it. Neither the first ruling or the overturning of it it changed any of the terms that Apple and QCM already agreed to. Maybe you should be aware of that before posting on the subject.
Boy you are are touchy and this isn't even about Google. Just where did i say QCM had abuse their SEP status under FRAND. All I said was that Apple had the right to dispute the terms of QCM license policy if they didn't think QCM was negotiating under FRAND and have a court decide the matter. Either way, QCM can not abuse their monopoly with their SEP patents. But QCM and Apple settled and Apple dropped their suit. I bet QCM gave up a little of what they originally wanted for a license and Apple didn't get as much as they wanted. Which is how it's suppose to work. I do not know the terms of Apple and QCM agreement. Do you?
IMO you didn't actually read AND comprehend what I said. I was agreeing with you that Qualcomm licensing wasn't pertinent to this thread, and advising that the original Qualcomm and FTC ruling had been overturned in case you missed it. The tone of your post suggested you had since you said: "And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory)." That's wrong, they are not. That was overturned on appeal.
At the same time you are correct that any OEM that feels aggrieved in a licensing dispute can file a breach of contract case under standard-setting organization by-laws but not antitrust law. One filed based on antitrust claims will almost certainly be dismissed as it's not an antitrust issue, which is what Qualcomm originally argued.
Apple was upset that QCM charged a royalty rate based on the selling price of the end devide rather than just the modem component provided by QCM. Here we have Apple charging a 30% royalty for content, irrespective of how much they have contributed in the development of the application. In the QCM instance, Apple had the choice to use a different modem supplier, developers on IOS don't have a choice.
What's different in these two cases ?
The difference is this. With QCM, their patents were granted SEP (Standard Essential Patents) status by the cellular industry. This means that every smart phone must use QCM patients in order to be compatible with industry standards. And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory). Plus QCM can not deny any smartphone maker the use of their patents. Any dispute over licensing terms will be settle by a court and under FRAND, if an agreement can not be reached.
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
As a related aside, you did see that much of the Koh ruling finding Qualcomm abused their position has now been overturned on appeal, correct? Not at all pertinent or comparable to the App Store, but something you should be aware of before posting on the subject in other threads.
But that ruling had nothing to do with Apple and QCM dispute. That was the suit brought on by the FTC. Apple and QCM settled their license agreement before that ruling and the overturning of it. Neither the first ruling or the overturning of it it changed any of the terms that Apple and QCM already agreed to. Maybe you should be aware of that before posting on the subject.
Boy you are are touchy and this isn't even about Google. Just where did i say QCM had abuse their SEP status under FRAND. All I said was that Apple had the right to dispute the terms of QCM license policy if they didn't think QCM was negotiating under FRAND and have a court decide the matter. Either way, QCM can not abuse their monopoly with their SEP patents. But QCM and Apple settled and Apple dropped their suit. I bet QCM gave up a little of what they originally wanted for a license and Apple didn't get as much as they wanted. Which is how it's suppose to work. I do not know the terms of Apple and QCM agreement. Do you?
IMO you didn't actually read AND comprehend what I said. I was agreeing with you that Qualcomm licensing wasn't pertinent to this thread, and advising that the original Qualcomm and FTC ruling had been overturned in case you missed it. The tone of your post suggested you had since you said: "And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory)." That's wrong, they are not. That was overturned on appeal.
At the same time you are correct that any OEM that feels aggrieved in a licensing dispute can file a breach of contract case under standard-setting organization by-laws but not antitrust law. One filed based on antitrust claims will almost certainly be dismissed as it's not an antitrust issue, which is what Qualcomm originally argued.
Don't be so touchy, looking for an argument where there wasn't (originally) one.
That is not what the court ruled when they overturned on appeal. What the court ruled was that QCM licensing policy (at the time) fell under the guideline of FRAND, no matter what the mobile phone makers thought about the license, not that QCM didn't have to negotiate their SEP license under the guidelines of FRAND. Are you saying that the courts would rule in favor of QCM, if they had asked for 25% of the retail cost of a phone, because they didn't have to negotiated under FRAND, with their SEP patents?
For sure, QCM could ask for the Moon with their non SEP licenses, as phone makers are not required to use those patents in their mobile devices. But if using a non SEP QCM patent increases the value of a mobile phone by 100%, QCM would be in their right to ask for 25% of the retail cost of the phone for a license. That would be 50% of the increase value QCM patent would had added to the phone.
BTW- could not read your link as it required a registration.
Antitrust Law Does Not Impose a Duty to License SEPs to Direct Competitors on FRAND Terms. The FTC claimed that Qualcomm violated both its FRAND commitments and an antitrust duty to deal by refusing to license its SEPs to rival chipmakers. The Ninth Circuit began by holding that no antitrust duty required Qualcomm to license its SEPs to its competing chip suppliers.
The Court Endorsed Qualcomm's Procompetitive Justifications for OEM-Level Licensing. The FTC argued that, even if Qualcomm did not violate an antitrust duty to deal, its decision to only license its patent portfolio at the OEM level still violated Section 2 of the Sherman Act. The Ninth Circuit disagreed, holding the FTC identified no harm to competition in the market for modem chips, and noting that Qualcomm proffered a reasonable, procompetitive justification for its practices. Absent Evidence of Predatory Pricing, Qualcomm's Licensing Royalty Rates and "No License, No Chips" Policy Did Not Violate Antitrust Law. The Ninth Circuit also rejected the district court's "primary theory," holding that Qualcomm's SEP licensing royalty rates and "no license, no chips" policy did not support an antitrust violation. First, the panel concluded that the FTC failed to prove an antitrust violation based on Qualcomm's "unreasonably high" royalty rates. Because evidence suggested Qualcomm did not charge below-cost retail prices for its chips in a scheme to "squeeze" competitors out of the market, and lost market share to competitors who "found ways to successfully compete," the court concluded that Qualcomm's royalty rates were "exactly the type" of price competition encouraged by antitrust law.
Qualcomm's "Exclusive Deals" With Apple Did Not Support the FTC's Antitrust Claims. In Qualcomm's case, the record did not suggest that any competitor or potential competitor was affected by Qualcomm's 2011 and 2013 exclusive CDMA chip contracts with Apple. Rather, as previously noted, the record showed that Intel successfully wrested Apple from Qualcomm in 2014.
The SSPPU Patent Damages Rule Did Not Support the FTC's Antitrust Claims. (Regarding) Qualcomm's SEP licensing royalty rates, the Ninth Circuit rejected the district court's holding that a violation of the rule in patent law that a "reasonable royalty" must be based on the "smallest salable patent-pricing unit" (SSPPU) would be an antitrust violation. The court flatly rejected a theory of antitrust liability that, in its view, "would presume anticompetitive conduct any time a company could not prove that the `fair value' of its SEP portfolios corresponds to the prices the market appears willing to pay for those SEPs in the form of licensing royalty rates."
The Proper Remedy for a Breach of FRAND Commitments Exists in Contract Law, Not in Antitrust Law. The Ninth Circuit refrained from deciding whether Qualcomm breached any of its FRAND commitments through the allegedly anticompetitive scheme. The opinion, however, makes clear that whatever remedy may exist for Qualcomm's FRAND violations, "the remedy for such a breach lies in contract and patent law.
But again, not pertinent to this discussion so perhaps better to move on and we can go over the finer points in a different thread. There's no lack of Qualcomm-relevant articles. Pick one.
Comments
Have you ever developed any piece of software? I'm an Engineer by education, and Professor by profession. I am an ok C and FORTRAN programmer (yeah, I know, a lot of people will say: Yuck!), due to specific needs from my area. But in my work for High Performance Computing (HPC) I've always used Intel MKL, which is a library Intel spent money making, and distribute for Intel platforms, for free, if you are in Academia, or an Open Source Developer, of for a license fee, if you are a for profit developer.
In my license is stated that, if I made an app, and distributed it for profit, using Intel MKL, I'd liable to missing license fees, and other damages. That's because I'm abusing my free license. Intel invested making it (and also profited from CPU sales), and if I am to make money based on their work, they want some of it. That's fair, isn't it? I'd still be writing code ,if I had to remake what MKL offers from scratch! And probably would not achieve the same performance.
Apple has a similar stance. It does provides all the tools needed for developing, in any of its platforms. And they are not cheap to make. Nor does an annual $99 fee cover costs. Apple also distributes the app, which is not a small expanse. Go to AWS and get a price quotation of server bandwidth? If your app has GBs of size, and is downloaded by millions of people, like Fortnite was, you'd have to pay tens of thousands of dollars, just for the distribution.
Apple makes nothing from Fortnite, because it is free. Although there are high costs distributing it. But Epic makes its bread from IAP. Should Apple host a multi-million raking app for free? Just because it is a trillion company? The work Epic stands on, on Apple developed APIs, has no aggregated value? And distribution costs?
Qualcomm is another matter altogether. Their contribution was solely on device communications, and nowhere else. No App, or any other function of the device, or even its design, was being propped up by Qualcomm IP. Same IP is being used in various white box Androids. It was it's own firmware, running on its own baseband chip, which was made by a third party, with licenses paid for. Qualcomm wanted to be paid twice, by the same aggregated value, in what became infamously known as double dipping.
If Qualcomm case had any legs to stand, it would not have settled promptly, as it did. Epic, won't be much different, I'd expect.
Qualcomm, you could argue that they do prop up the value of the iphone. Without a modem, the smartphone wouldn't be very smart. I am not supportive of the QCM model either, but i do see their stance as similar. QCM were seeking a value as a percentage of the overal device not their sole contribution. Apple are doing a similar thing.
Btw, Epic charge a 5% royalty after the first $1M of gross revenue. I assume they have similar investment in the tooling costs.
Since then, smartphones have become the Swiss army knives of consumer products, which has lead to the death of a mounting number of consumer product classes as those capabilities have been folded into smartphones.
Why is it still okay for Qualcomm to use the entire cost of the phone as the basis for licensing fees? The cellular modem has nothing to do with the screen or build quality, or the quality or configuration of cameras, as examples. Why should the makers of flagship smartphones be penalized with the same fee structures as basic phone that structure was built on?
On the other hand, providing a standard fee structure for the app store makes sense as it creates a level playing field for all participants, including those that actually use the store for free by charging nothing for their apps.
I think that it is a fair question of whether that standard fee structure should be 30%, but I don't think that alternate app stores are actually consumer friendly at all, given that users would compromise both security and device support from the developer of the OS, as in this case, Apple could no longer be liable or responsible for a device that is compromised by an alternate apps store.
But really, that's a false equivalency altogether. Just as the comparison of costs associated with distribution of downloadable content (bought by a lesser fraction of users) versus the download of a multi-gigabyte app (which most people may have sampled, even if for a few minutes/hours)!
Now, try and compare the value Apple offers, for a 30% cut, to the value Epic offers, for a 5% cut. On one side, there is a multitude of applications, platforms, and market within your reach, limited only by your capacity to execute an idea, or solution, for macOS, iPadOS, iOS, tvOS and watchOS. On the other side, you can spend a few hours designing a "badass" item for a game, that soon enough, will be replaced by the next "cool" thing, probably from another vendor...
As for the whole parts situation, that’s not a really good analogy. Car parts (mostly) don’t deal with your personal data and safety (apart, obviously, from GPS navigation and entertainment systems, and other critical components relating to vehicle safety); computer and smartphone apps, on the other hand… may very well contain intentional vulnerabilities, backdoors, full-blown malware etc. if they come from untrusted sources.
Anyway, I digress; on the other hand, I don’t think they aren’t being sincere about the security factor of not having third-party stores on their platform. Can you seriously argue that the Mac is as safe from malware as the iPhone and iPad? What about Android devices?
Therefore , Apple had the right to dispute QCM licensing policy, if they didn't think it conformed to FRAND and have a court settle the dispute by coming up with a license agreement that both must agree to. In the meantime, QCM had to keep allowing Apple to use their chip under the terms when they accepted to have their patents granted SEP status. Apple will back pay what is owed when an agreement is reached. QCM is not allowed to abuse the monopoly they have with their SEP patents.
Having Fortnight in the Apple App Store is not essential for Apple to sell any of their iOS iDevices. Nor is it essential for Epic to have Fortnight in the Apple App Store. Epic can survive without iOS players. After all, 71% of Fortnight players are on game consoles and mobile gaming is only 12% of Fortnight players... right?. iOS and the Apple App Store can not be considered a monopoly in this case, as Epic has easily made a sizable profit with the other 88% of gamers on other platforms. Even after paying a 30% cut on 71% of them.
No one forced Epic to signed the agreement to pay Apple 30% of Fortnight in-app revenue. But Epic did just that. And instead of just pulling Fortnight from the Apple App Store because they weren't happy with paying Apple a 30% cut (but I bet they had no problem with their 70% cut) and then disputing Apple 30% cut, they violated the terms they agreed to that allowed Fortnight in the Apple App Store. Thus forcing Apple remove Fortnight. And now Epic is suing Apple for removing Fortnight from their App Store because they violated the terms of the agreement they signed? That's like if a renter that signed a 1 year lease agreement and then started paying 30$ less in rent after several months because he thought it was too high on the leased he signed and then sues the landlord because he was evicted.
Epic seem to have no problem paying a 30% cut to MS, Sony and Nintendo. It seems to be the standard rate for such an arrangement. It doesn't matter that Epic doesn't think they were getting their 30% worth with Apple cut. They were still getting 70%. The same 70% they got with Fortnight on X-Box, PlayStation and Switch. If Apple wanted to donate all of the 30% they got from Epic Fortnight game to an organization that helps kids free their addiction to online gaming, Apple is free to do that with their cut. Epic has no say in that. That has no bearing on Epic still making the same 70% from the less than 12% of iOS players, as from the 71% of players on X-Box, Playstation and Switch.
Suppose Apple said that it was pure greed for Epic to charge Fortnight players $20 for a digital "cool" outfit when it cost Epic practically no more than a player playing with the not so cool $8 outfit or the standard free outfit. It's not like it cost Epic more to ship the "cool" outfit to the player or the "cool" outfit consumes more bandwidth. Apple could easy look at that and say ... we want a 35% cut, if you want Fortnight in our App Store. Their store, their terms.
Apple never signed a license agreement with QCM, under the terms that QCM wanted to license out their SEP patents and then reneged on that agreement some time later. And Apple has never signed any license agreement with other patent holders, under the terms QCM wanted for their license. So QCM can't argue that Apple signed the same type of agreement for other patent licenses but not willing to sign the same type of agreement with us.
Boy you are are touchy and this isn't even about Google. Just where did i say QCM had abuse their SEP status under FRAND. All I said was that Apple had the right to dispute the terms of QCM license policy if they didn't think QCM was negotiating under FRAND and have a court decide the matter. Either way, QCM can not abuse their monopoly with their SEP patents. But QCM and Apple settled and Apple dropped their suit. I bet QCM gave up a little of what they originally wanted for a license and Apple didn't get as much as they wanted. Which is how it's suppose to work. I do not know the terms of Apple and QCM agreement. Do you?
https://www.apple.com/newsroom/2019/04/qualcomm-and-apple-agree-to-drop-all-litigation/ ;
I was agreeing with you that Qualcomm licensing wasn't pertinent to this thread, and advising that the original Qualcomm and FTC ruling had been overturned in case you missed it. The tone of your post suggested you had since you said: "And because the cellular industry handed QCM a near monopoly with their patents, QCM must agree to license out those patents under FRAND (Fair Reasonable And Non Discriminatory)." That's wrong, they are not. That was overturned on appeal.
At the same time you are correct that any OEM that feels aggrieved in a licensing dispute can file a breach of contract case under standard-setting organization by-laws but not antitrust law. One filed based on antitrust claims will almost certainly be dismissed as it's not an antitrust issue, which is what Qualcomm originally argued.
If you're really interested in what the effect of QC winning the appeal is this link is very informative.
https://www.lexology.com/library/detail.aspx?g=3d8191a7-447a-41d3-9169-3d74e3ebc32f
Don't be so touchy, looking for an argument where there wasn't (originally) one.
For sure, QCM could ask for the Moon with their non SEP licenses, as phone makers are not required to use those patents in their mobile devices. But if using a non SEP QCM patent increases the value of a mobile phone by 100%, QCM would be in their right to ask for 25% of the retail cost of the phone for a license. That would be 50% of the increase value QCM patent would had added to the phone.
BTW- could not read your link as it required a registration.
This is what the Appeals Court decided:
Antitrust Law Does Not Impose a Duty to License SEPs to Direct Competitors on FRAND Terms. The FTC claimed that Qualcomm violated both its FRAND commitments and an antitrust duty to deal by refusing to license its SEPs to rival chipmakers. The Ninth Circuit began by holding that no antitrust duty required Qualcomm to license its SEPs to its competing chip suppliers.
The Court Endorsed Qualcomm's Procompetitive Justifications for OEM-Level Licensing. The FTC argued that, even if Qualcomm did not violate an antitrust duty to deal, its decision to only license its patent portfolio at the OEM level still violated Section 2 of the Sherman Act. The Ninth Circuit disagreed, holding the FTC identified no harm to competition in the market for modem chips, and noting that Qualcomm proffered a reasonable, procompetitive justification for its practices.
Absent Evidence of Predatory Pricing, Qualcomm's Licensing Royalty Rates and "No License, No Chips" Policy Did Not Violate Antitrust Law. The Ninth Circuit also rejected the district court's "primary theory," holding that Qualcomm's SEP licensing royalty rates and "no license, no chips" policy did not support an antitrust violation. First, the panel concluded that the FTC failed to prove an antitrust violation based on Qualcomm's "unreasonably high" royalty rates. Because evidence suggested Qualcomm did not charge below-cost retail prices for its chips in a scheme to "squeeze" competitors out of the market, and lost market share to competitors who "found ways to successfully compete," the court concluded that Qualcomm's royalty rates were "exactly the type" of price competition encouraged by antitrust law.
Qualcomm's "Exclusive Deals" With Apple Did Not Support the FTC's Antitrust Claims. In Qualcomm's case, the record did not suggest that any competitor or potential competitor was affected by Qualcomm's 2011 and 2013 exclusive CDMA chip contracts with Apple. Rather, as previously noted, the record showed that Intel successfully wrested Apple from Qualcomm in 2014.
The SSPPU Patent Damages Rule Did Not Support the FTC's Antitrust Claims. (Regarding) Qualcomm's SEP licensing royalty rates, the Ninth Circuit rejected the district court's holding that a violation of the rule in patent law that a "reasonable royalty" must be based on the "smallest salable patent-pricing unit" (SSPPU) would be an antitrust violation. The court flatly rejected a theory of antitrust liability that, in its view, "would presume anticompetitive conduct any time a company could not prove that the `fair value' of its SEP portfolios corresponds to the prices the market appears willing to pay for those SEPs in the form of licensing royalty rates."
The Proper Remedy for a Breach of FRAND Commitments Exists in Contract Law, Not in Antitrust Law. The Ninth Circuit refrained from deciding whether Qualcomm breached any of its FRAND commitments through the allegedly anticompetitive scheme. The opinion, however, makes clear that whatever remedy may exist for Qualcomm's FRAND violations, "the remedy for such a breach lies in contract and patent law.
But again, not pertinent to this discussion so perhaps better to move on and we can go over the finer points in a different thread. There's no lack of Qualcomm-relevant articles. Pick one.